What they mean when they say ... 'Self-asssessment'

LOOSE CHANGE
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The Independent Online
Self-assessment is the US-style method of filling in your tax return. Instead of supplying the Inland Revenue with your personal details and letting the tax inspector work out how much you owe Kenneth Clarke (or Gordon Brown), you might soon have to do it yourself. Self-assessment begins in April 1997, the start of the new tax year, and is the subject of a pounds 28m advertising campaign launched by the Revenue this week.

The new system will apply to about 9 million taxpayers, those who currently fill in an annual tax return. This includes the self-employed, partners, directors and individuals with unearned and investment income. It does not affect taxpayers who have their tax deducted at source through the Pay as You Earn system.

However, from April 1996, all taxpayers will be required by law to keep records of their income and any capital gains to enable them to complete the new tax returns. These records will have to be kept for 22 months after the end of the tax year (5 April). The self-employed will have to hold on to their records for five years.

Taxpayers will also required to tell the taxman within six months after the end of the tax year whether they have received any income or capital gain.

When the self-assessment comes into force you will get a new-look tax return . In it will be a section where you can calculate your own tax. If you do not want to, the Revenue will still do it for you. The Revenue will also give you one main point of contact for your tax affairs and promises a clear statement of your "account'' with them, showing payments due and payments made.While You won't have to calculate your tax if you don't want to, the responsibility for your tax affairs will rest with you.

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